AT&T Statement on Spectrum Aggregation and Auction Eligibility Order

The following may be attributed to Jim Cicconi, AT&T Senior Executive Vice President of External and Legislative Affairs:

“AT&T has long argued that the FCC should adopt a spectrum aggregation and incentive auction framework that will encourage all carriers to participate vigorously in the upcoming auctions. We specifically supported broad participation in the incentive auction, as contributions from the entire industry will be necessary to make the auction a success. And we believed that the right framework would allow the Commission to send a clear message to broadcasters that they should bring as much spectrum as possible to the auction as there will be sufficient revenue to pay for their contributed licenses.

“Today, the Commission adopted rules and an auction framework that puts the auction on the path toward success. While many important issues remain to be resolved, we believe that the spectrum aggregation and auction rules adopted today represent a significant step forward and will demonstrate to broadcasters that the incentive auction can and will attract significant carrier interest and demand. And while we have long opposed auction restrictions and set asides, the compromise framework will give AT&T a fair shot to participate at auction for a meaningful 600 MHz footprint. For these reasons, we support the auction framework.

“The steps taken by the FCC today are substantial.

“First, the spectrum aggregation screen was updated and rationalized, and now counts the full array of spectrum actually in use by wireless carriers today. This will hopefully put to rest the long-standing spectrum aggregation battles that emerged in almost every transaction.

“Second, the FCC set rules in place for a successful AWS3 auction. While much work remains to bring that spectrum to market, AT&T anticipates that it will participate meaningfully in that auction to supplement its spectrum portfolio.

“Third, on the 600 MHz auction, the FCC adopted eligibility rules that will foster a more competitive bidding process while ensuring a multiplicity of licensees in the new 600 MHz band.

“Under the FCC’s proposed framework, the bidding must reach a threshold of success before the auction can close. In addition, no eligibility restrictions would apply until this threshold is met.

“As we noted in a recent filing, we think a reasonable threshold would be $1.50 MHz/POP, which means the auction of a nationwide 10×2 MHz license would be expected to yield at least $9 billion in revenue. At that threshold, 600 MHz spectrum would be an attractive opportunity for AT&T.

“AT&T believes that the framework adopted today will give AT&T a fair opportunity to expand its LTE footprint to benefit consumers in all markets, and AT&T remains committed to auction success and anticipates that it will participate broadly. Although we expect bidding at auction to be competitive, we anticipate that, depending on auction dynamics and pricing, AT&T will bid to obtain between 20 and 40 MHz of spectrum nationwide.

“Finally, we believe that a threshold price of $1.50 MHz/POP will attract significant broadcaster interest, as it should, so that an initial clearing target of 70 MHz or more is very likely. Although the Commission’s draft order contemplates rules for a 40 or 50 MHz auction, given industry demands and capacity challenges, AT&T considers those scenarios unlikely to occur.

“In short, the 600 MHz auction represents an enormous opportunity for the wireless industry to obtain new and valuable spectrum licenses to satisfy consumer demand for new and innovative mobile services. The order adopted today represents a significant milestone for FCC progress. And AT&T intends to participate actively and meaningfully in the auction to ensure that it is a success for all participants.”